THE INTERNATIONAL FORECASTER 12, OCTOBER, 2002 (#2)
An international financial, economic, political and social commentary.
Robert Chapman, Editor Vol. 6- No. 10-2 (34 pgs.)
Phone & Fax: 941 639 4756
E-mail: bif4653@comcast.net or info@intlforecaster.com
GOLD, SILVER, PLATINUM, PALLADIUM AND DIAMONDS
As we predicted, second quarter jewelry demand was off 1.7% to $5.84 billion, while investment demand rose 3.6% to $570 billion. Perhaps now professionals and investors will begin to understand that in turbulent times, gold represents a flight to quality. Gold has always been the ultimate currency, as people turned away from fiat currencies. Golds’ primariy historical function has and always will be that of a financial asset. We caution you that this flight to quality has only just begun.
Silver is scarce and getting harder to find, but you wouldn’t think so looking at the price of silver. We, David Morgan and Ted Butler have spoken of the large illegal silver short on the Comex but have not mentioned the fact that major short positions exist on the five leading silver producer stocks of Silver Standard, Hecla, Coeur d’Alene, Pan American and Apex. We believe above-ground inventories of silver will be exhausted by next summer and this short selling of physical silver and shares has suppressed prices so that little new production is being brought on stream, which means sooner or later there’ll be a silver explosion. Much of the price suppression is the product of derivative use, which allows manipulation. The demand for silver remains strong as does demand for Silver Eagles, which makes the US government a perpetual buyer of silver. This coming year will be a big one for silver. Get your positions because 2003 should be a big year for the metal.
According to the Swiss National Bank’s annual report, over 300 tons of gold has been leased out. Their remaining gold is in different places stored domestically and abroad. One of your fellow subscribers in Zurich has asked the National Bank questions about it, but they will not tell him where the gold is.
Rumor has it that the US is buying silver from Mexico at well above spot and secretly transporting it to the Comex. A third-quarter drop in production by Mexican mines would seem to support this rumor.
As you can see the gold manipulation has included the gold and silver shares, the antithesis of a falling stock market and world fiscal and monetary chaos. These are major unhedged gold and silver stocks. The bad news is, there are unbelievable short positions that have contributed to falling share prices. The good news is they are going to have to eventually cover. At some point these shorts will put a floor under prices. These volume positions represent many weeks trading volume, thus if gold breaks out there will be an explosion to the upside that will be indescribable.
Stk---Oct-2001---Jan-2002---Mar-2002--June-2002--Sept-2002
AEM --1,528,891--2,491,493--3,366,534--3,839,396--5,081,776
GG -----146,524----513,012--2,688,668--4,601,437--5,731,613
GLG -----80,200----108,594----778,728--1,961,058--1,812,717
MDG ----120,754----596,847----297,764--2,260,617--2,865,722
HGMCY --306,696--1,088,323--1,516,221--2,610,722--3,510,799
DROOY ---22,579----102,630----166,046----642,191----810,310
SIL ---------------280,036----268,367----614,131----791,665
HL ----------------103,500----105,500--1,130,654--2,405,148
PAAS ---------------11,672------4,509----519,723--1,002,105
SSRI ---------------37,843------5,060----461,810----874,062
The World Bank has killed a $250 million loan to Gabriel Resources to back a project creating the largest open-pit gold mine in Europe. The $400 million Rosia Montana project would displace more than 2,000 people and tear down 900 homes. They could have had a 1,000-acre reservoir to collect cyanide tailings. The Romanian government backed the project but environmentalists obviously have more clout. The mine would produce 10 million ounces of gold over 15 years. We’d expect the project to proceed but the World Bank’s politically correct withdrawal is disgusting.
Newmont is threatening to walk away from the big Uzbek project.
CENTRAL BANK OF RUSSIA OFFERS MORE ZODIAC COIN
MOSCOW, October 7. /RIA Novosti/ - The Central Bank of Russia will issue more coins of the Zodiac series, starting tomorrow. It will be Scorpio now-silver two-rouble pieces and gold 25 roubles. Up to 20,000 silver coins will appear in circulation, and up to 50,000 gold, say Central Bank PR.
Of 925 standard, the silver coins contain 15.55 grams of pure silver each. Gold coins are of 999 standard, with 3.11 grams of pure gold.
Every coin bears on the obverse a bold relief emblem of the Central Bank--two-headed eagle, wings down-in a bead frame. The reverse represents a scorpion in bold relief, against a background of stars, under the zodiacal symbol of Scorpio.
*****
Hello Subscribers,
This is what I was hinting at in the October issue. The potential for using silver in this application is 100 million ounces on an annual basis according to the press release below. In an earlier article from the Silver Institute the estimate was up to 200 million ounces annually which is just about equal to the photography industry.
Speaking of photography, most subscribers know that color film uses very little silver, in fact, none on a theoretical basis. So all this talk about digital killing silver needs to be examined carefully. First, if digital is replacing the public's 35mm color camera there is no loss. Digital is having some impact in the Newspaper publishing field, but the digital boogeyman is much more hype than fact.
Silver remains under pressure and it looks like it will test 4.20 short term, Eric Hadick as long term readers know, is one excellent technician and Eric feels silver needs to test $4.01.
The following press release should help us to keep the faith. Silver will have it's day.
Sincerely,
David Morgan
silver-investor.com
U.S. Congress Looks to Silver-Based Biocides for Wood Preservation - Harmful Arsenic-Based Solutions Targeted for Government Ban
October 10, 2002
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(Washington, D.C. - October 10, 2002) - Senator Larry Craig (R-ID) has introduced legislation directing the Secretary of Agriculture to conduct a study of the effectiveness of silver-based biocides as an alternative treatment to preserve wood. Senator John Ensign (R-NV) has cosponsored the bill.
S.3062, the "Wood Preservation Safety Act of 2002," introduced in the U.S Senate on October 4, directs the Forest Products Laboratory in Madison, Wisconsin to conduct a study on the effectiveness of silver-based biocides as a wood preservation treatment.
Earlier this year, the Environmental Protection Agency (EPA), the chemical industry and the home-improvement industry negotiated an agreement to phase out the use of arsenic-based wood preservatives in pressure-treated wood by December 31, 2003. This transition affects virtually all residential uses of wood treated with chromated copper arsenate (CCA), including wood used in play structures, decks, picnic tables, landscaping timbers, residential fencing, patios and walkways/boardwalks. Beginning January 1, 2004, the EPA will not allow any CCA products in these residential uses. Corporations such as Home Depot and Lowe's have announced they would stop selling lumber treated with an arsenic-based preservative in concert with the EPA announcement.
"Since ancient times silver has been used as a treatment to prevent the spread of bacteria and has acted as a purifying agent. Its healthful properties are well known, and it's projected that by 2006 silver's use as a biocide in various applications could grow by 600%," said Paul Bateman, Executive Director of the Silver Institute. "However, if silver-based biocides were used as an alternative to harmful arsenic-based preservatives, over 100 million ounces a year would be consumed in this application alone, adding significantly to overall worldwide fabrication demand," Bateman added.
The Silver Institute is a nonprofit international association. Established in 1971, the Institute serves as the industry's voice in increasing public understanding of the value and many uses of silver.
***
Dear Ross, (Beaty, President of Pan American Silver)
Ed Steer sent me a copy of your response to his letter, which included my article, "The Silver Producers Are The Problem." In that article, I specifically cited you, in your dual role as CEO of Pan American and President of the Silver Institute, as being negligent in your responsibilities to your shareholders and to silver investors in general. I stand by my words.
The COMEX crooks continue to rig the price, causing damage to your company and silver investors, and you are "very very upset" with my words. Grow up.
Just like the CFTC and the COMEX, you wrote a lot of words, but managed to avoid my two very clear and specific allegations. One, where is the silver backing up the 350 million ounce net short sale by the 8 or less COMEX traders at the top of the recent price rally? Two, why are their no legitimate speculative position limits in place in COMEX silver? My God man, it is you who should be asking these questions, not me! Obviously, you don't have the answers, and neither do they. Ask them - coming from a silver producer and President of the Silver Institute, it could make all the difference in the world.
Look, we don't care for each other, but so what? Instead of threatening silly slander suits, do something productive - make the COMEX show you the silver backing the 350 million ounce short sale and ask them why are there no legitimate speculative position limits in silver. When they don't answer, get a simple court injunction to enforce legitimate limits, as the law dictates. Just attempting to get such an injunction will probably set the price free. Or just sit there and pretend there's nothing you can do. Your choice.
Ted Butler
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